Crypto Acronyms are defined and explained in the sections below. These crypto acronyms, words, and phrases are new for many and represent acronyms and buzzwords used in the Crypto Eco-System. Crypto Acronyms are often used for efficiency and are understood by strong supporters of the crypto ecosystem. Therefore, understanding how crypto acronyms are defined and explained will help you in your study of cryptocurrency and how future use cases will become more and more understandable.
Alt-Coin
An Alt-Coin is any cryptocurrency other than Bitcoin.
Bitcoin
Bitcoin (BTC) is a digital currency created in 2009 to enable instant payments directly between two parties without a middle man or intermediary. It is often referred to as the grandaddy of all cryptocurrencies and digital assets.
AML
Anti Money Laundering procedures required by cryptocurrency exchanges or custodians.
Blockchain
A Blockchain is a decentralized ledger system maintained by computers all around the world. Blocks are formed by Bitcoin Miners and they are linked together in a chain to store data that can be shared by other blocks to verify transactions and confirm asset ownership. As of 25 NOV 2023, there are approximately 800,000 blocks in the Bitcoin Network.
CEFI
Centralized Finance.
Centralized
Centralized operations have been in traditional banking and government control. It is usually run by a centralized computer system that can be a single point-of-failure.
CEX
Centralized Exchange used for Stock or Cryptocurrency exchanges.
Coin
Coins are any cryptocurrency that has a standalone independent blockchain like Bitcoin or Ethereum. Coins are the native currencies of crypto blockchains which meas that they are used to pay for transaction fees on that blockchain. Using the blockchain requires use of that coin. (See Token)
Coin Market Cap
A Cryptocurrency’s Market Capitalization is calculated by multiplying the number of coins or tokens in circulation by the current price of that coin or token. This information can be easily found on coin tracking websites like CoinMarketCap and CoinGecko.
- Large Cap = 1 Billion or more (Generally Low Risk-Low Reward.
- Mid Cap = 100M to 1B (Recognized but Not Established).
- Small Cap = Less than 100M (Generally High Risk-High Reward).
dApps
Decentralized applications are digital applications that run on a blockchain network of computers instead of relying on a single computer. dApps are free from the control and interference of a single authority.
DAU
DAU, or daily active users, is a metric used to measure the number of unique users who interact with a cryptocurrency project on a daily basis. DAU is a valuable metric for crypto projects because it can be used to track the growth and engagement of the project’s community.
De-Centralized
Decentralization occurs when there is no single point-of-failure or central control. Decision-making is done by a majority vote and not the result of a single entity or committee.
DEFI
De-Centralized Finance.
DEX
De-Centralized Exchange.
FOMO
Fear Of Missing Out – With this mindset, investments may be made because of fear of missing out — which may or not be a valid reason for the investment.
FUD
Fear Uncertainty Doubt. With this in mind, there is a tendency to avoid Risk Assets.
Hashrate
Hashrate is a measure of the computational power per second used when mining. In the case of Bitcoin, the hashrate indicates the number of times hash values are calculated for PoW every second. Hash values represent large amounts of data as much smaller numeric values, so they can be used with digital signatures.
Immutable
The term “immutable” in the context of a blockchain implies that the data or distributed ledger is permanent and tamper-proof, and its history cannot be modified or changed after its creation.
KYC
Know Your Customer Procedure – Needed by Cryptocurrency Exchanges to verify identity of all account holders in an attempt to prevent money laundering. (See AML)
Layer 1
Cryptocurrency with its own Blockchain; i.e. Bitcoin (BTC),Ethereum (ETH), or Solana (SOL). Layer 1s are typically built for security for all base layer and Layer 2 transactions and data storage.
Layer 2
Cryptocurrency built on top of a Layer 1 to be more scaleable (faster) on the second layer while the base Layer 1 continues to provide security of the network.
Meme Coins
Meme coins are cryptocurrencies inspired by Internet jokes, satire, and memes (video, image, or text). They are often not designed to have any specific use cases and may hold little or no intrinsic value. Because of this, meme coins are typically high risk investments and should not to be confused with quality cryptocurrencies that have multiple use cases.
Oracle
Oracles are entities that connect real world data to the Web3 blockchain to enable Smart Contracts to execute based on inputs and outputs from the real world. Oracles deliver real-world data to blockchain smart contracts safely, reliably, and back again. (See Smart Contracts)
Peer-to-Peer
A Peer-to-Peer systems means you can transfer digital assets directly between two entities without having to go through a third party intermediary such as a central bank or government.
Permisionless
Permissionless means that you do not need permission from a centralized authority to make a transaction. An example of a centralized authority is an intermediary like a bank or controlling government. (See Peer-to-Peer)
Pump & Dump
Pump and Dump is a negative action caused by someone attempting to promote (pump) a coin or token with the main goal of raising its price to make a profit by selling (dumping) the coin or token for profit. So, be cautious of the hype and do a study of the true value of the coin (tokenomics).
RWA
Real World Assets, such as your home and car. At this time, governments and central banks want real world assets to be tokenized on their centralized blockchains in an attempt for more control. This means that your ownership of those assets could be changed at the flick of a button without your consent on a centralized blockchain. The alternative will be use of decentralized blockchains, and until then, keep titles to your real world assets in paper form and in secure locations.
Smart Contract
Smart contract cryptos are essentially the back bone of the entire crypto ecosystem. Smart contracts allow decentralized apps to take advantage of blockchain security, reliability, and accessibility — while at the same time — offering sophisticated peer-to-peer functionality. Just like a typical contract or agreement, a web3 blockchain smart contract sets forth the terms of an agreement or deal between parties. The code of a smart contract is written so agreements can be automated between the creator and recipient to make them immutable and irreversible.
Token
- Utility Token – Used to power a use case like on-chain data gathering or power a protocol like a decentralized exchange like the large cap allocation.
- Security Token – A security token is a form of cryptocurrency that represents fractions of assets that have real value such as equity in a company or protocol. Companies looking to raise funds for expansion projects can decide to issue separate ownership of their company through digital tokens instead of issuing shares.
Tokenomics
Tokenomics is the study of the supply, demand, distribution, and valuation of cryptocurrencies. The definition includes everything from the issuance of a cryptocurrency, its burn mechanism, its utility, and more. (See Token)
Tokenization
Tokenization of assets is the process of converting a tangible or intangible asset into a digital token that represents the asset on a blockchain. Tokenization can be applied to various types of assets such as cash, equity (stocks), real estate, commodities, art, debt and more. When such data is uploaded to a blockchain, tokenization adds immutability to asset ownership, and when encrypted with data to represent that ownership, the asset owner(s) can be identified and verified. Simple examples would be a title to an automobile or ticket to a concert that can be verified with a QR code on a blockchain.
TVL
Total Value Locked is the overall value of all coins deposited on a DeFi (Decentralized Finance) protocol. The total value of these digital assets can be used to gauge the interest in that sector of the crypto industry. Investors can look at TVL when assessing whether a DeFi project’s native token is valued appropriately..
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